GBPUSD Weekly Outlook

GBP/USD reversed directions last week, losing close to one cent. The pair closed slightly above the 1.64 line. This week’s highlight is Claimant Count Change. Here is an outlook for the main events moving the pound, and an updated technical analysis for GBP/USD.

There was good news from both US and UK releases. Unemployment Claims remained at low levels, and Core Retail Sales and the Philly Fed Manufacturing easily beat their estimates. In the UK, CPI hit the BOE target of 2.0% and Retail Sales sparkled, hitting a nine-year high.

1. Rightmove HPI: Monday, 00:01. This housing inflation indicator continues to show declines, pointing to weakness in housing prices. The index posted a sharp drop of -1.9% last month, and the markets are hoping for better news in the upcoming release.
2. CBI Industrial Order Expectations:Tuesday, 11:00. This manufacturing indicator has looked solid in recent releases, and hit 12 points last month, matching the forecast. The markets are not expecting much change in the December reading.
3. Claimant Count Change: Wednesday, 9:30. This is the highlight of the week, and the indicator could have a major impact on the direction of GBP/USD. The indicator has been posting sharp declines, as the employment situation improves as the UK economy picks up. Another strong drop is forecast, with a December estimate of -32.3K. The Unemployment Rate is expected to edge lower to 7.3%, down from 7.4% last month.
4. MPC Asset Purchase Facility Votes: Wednesday, 9:30. The markets are expecting another unanimous, 9-0 vote for the most recent QE decision, which kept QE steady at 375 billion pounds.
5. MPC Official Bank Rate Votes: Wednesday, 9:30. The voting breakdown could lead to some volatility from the pound if there is an unexpected reading. The markets are anticipating a unanimous, 9-0 breakdown in favor of the most recent decision to maintain the benchmark interest rate at 0.50%.
6. Average Earnings Index: Wednesday, 9:30. This indicator has been moving higher, and the upward trend is expected to continue, with an estimate of 1.1% for December.
7. Public Sector Net Borrowing: Wednesday, 9:30.Public Sector Net Borrowing was a disappointment last month, as the debt ballooned to 14.8 billion pounds, up from 6.4 billion in the previous reading. This surprised the markets, which had expected a debt of just 6.6 billion. The markets are braced for another weak reading, with an estimate of 12.3 billion.
8. External BOE MPC Member Ian McCafferty Speaks: Thursday, 8:30. McCafferty will address a university audience in Nottingham. A speech that is more hawkish than expected is bullish for the pound.
9. BOE Executive Director Paul Fisher Speaks: Thursday, 9:00. Fisher will speak at a financial forum in London. Analysts will be looking for some clues regarding the BOE’s future monetary policy.
10. 10-year Bond Auction: Thursday, Tentative. The average yield on 10-year bonds has been very steady, and came in at 2.73% in the November auction. The indicator is a useful gauge of investor confidence, but is unlikely to affect the movement of GBP/USD.
11. CBI Realized Sales: Thursday, 11:00. The indicator had an outstanding November, jumping to 34 points. This crushed the estimate of 9 points. The markets are expecting another strong reading in December, with the estimate standing at 28 points.
12. BBA Mortgage Approvals: Friday, 9:30. This indicator is an important gauge of activity in the UK housing sector as well as an indicator of consumer spending. The indicator showed improvement in the last few months and the November release came in at 45.0 thousand. Another strong reading is expected for December, with an estimate of 47.2 thousand.

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